The government's public debt during the third quarter (October-December) of the current fiscal crept up by 3.2 per cent to Rs.33,82,645 crore from Rs.32,76,368 crore at the end of the July-September quarter, primarily on account of higher borrowings to facilitate increased spending in the wake of subdued revenue collections and weak capital inflows.
However, this is lower than the 4.7 per cent hike witnessed in the previous quarter.
Internal debt
However, the internal debt component, both as a percentage of the total public debt as well as the country's GDP (gross domestic product), was a tad higher during the third quarter as compared to the previous three-month period.
While internal debt during October-December this fiscal constituted 89.9 per cent of public debt as compared with 89.6 per cent at the end of the second quarter, the “outstanding internal debt of the Government at Rs.30,41,895 crore constituted 33.9 per cent of GDP compared with 32.7 per cent at end-September 2011,” the report said.
Shortfall
Following a shortfall in other modes of financing, the government's market borrowings through dated securities went up during the second half of the fiscal by Rs.52,872 crore as against the budget estimates. In addition, on review of the government's overall funding requirements, another Rs.40,000 crore was picked up from the market to take the total increase to Rs.92,872 crore during the fiscal year. The need for higher borrowings was owing to the fact that inflows on account of foreign investment during October-November 2011 remained subdued as in the second quarter of 2011-12 with a “lacklustre performance” by both components — foreign direct investment (FDI) and portfolio investment by foreign institutional investors (FIIs). As a result, there was a net outflow of capital in October and only a marginal inflow in November.
The report on quarterly data on ‘Public debt management' released on Thursday has noted that “the fiscal outcome during April-December of FY12 indicates that all the key deficit indicators as percentage of budget estimates (BE) for 2011-12 were higher than their levels during the corresponding period of the previous year because of lower revenue collections both from tax and non-tax sources”.
